Scenario 9.9 Gollee those cats sure go through a lot of food, \"Geoff exclaimed

Question

Scenario 9.9 Gollee those cats sure go through a lot of food, "Geoff exclaimed as he saw the shopping list pad that had been pre-printed with the words "cat food" a the top. He pondered a different approach to shopping for the furry little darlings, reviewed his shopping records, and discovered the following. The price of cat food has held steady at 89 cents per can. Despite feigning indifference, each of the seven cats nibbles their way through an average of one can per day, three hundred sixty five days a year. The price of gasoline has held constant at $3.50 per galon and his pickup uses a galion each way to the cat food store The cost to hold a can of cat food is 10% of the unit pnce Use the information in Scenario 9.9 to determine the annual setup cost if Geoff follows an EOQ policy to obtain cat food O $14 O s28 $112 o$56

Explanation / Answer

EOQ =(2FD/C)1/2

F=Fixed cost per order

D = demand

C= Cost per unit per year

EOQ = (2*(3.50+0.89*0.1)*365/0.89) = $56

Hence Answer is option 4 $56

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